Ponzi Schemer Loses Claim Against SEC

WASHINGTON (CN) – A federal judge scoffed Monday at Privacy Act claims that an imprisoned Ponzi schemer lobbed against the Securities and Exchange Commission. John Bravata is serving 20 years in prison after a federal jury in Detroit convicted him for his role in schemes that defrauded 440 investors of $52.9 million. In addition to a $44.5 million restitution bill, Bravata faces orders to disgorge another $5.2 million, pay $1.2 million in prejudgment interest and settle a $1.8 million fine. Last year, Bravata filed suit in D.C., claiming that the SEC had “manufactured and egregiously falsified or overlook truth as to inaccurate Records,” supposedly in violation of the Privacy Act. U.S. District Judge Tanya Chutkan threw out the case Monday for failure to state a claim. The nine-page ruling notes that Bravata asked the SEC last year for certain unspecified records that he claimed the agency had altered. The agency’s Office of Freedom of Information and Privacy Act Operations responded to the request but stated it could not turn over records unless he was more specific about which records he wanted. Instead of responding with a more specific request, Bravata demanded the agency hand over everything it “reviewed and relied upon to come to the conclusions that [plantiff] or his entities were running a Ponzi scheme,” according to the ruling. Judge Chutkan found Monday that Bravata did not “exhaust administrative remedies” before filing suit and did not prove the information he requested did not fall under the exemptions that the SEC cited. “Nothing in the record of this case suggests the Plaintiff’s request complied with the SEC regulations, and his failure to exhaust his administrative remedies warrants dismissal of his Privacy Act claim,” Judge Chutkan wrote. Bravata furthermore never addressed the SEC’s claim that it “has no obligation to allow inspection [o]f or amend the records because [it] has promulgated regulations exempting” them from the Privacy Act’s requirements, according to the ruling. Chutkan close on this point with precedent from the D.C. Circuit case FDIC v. Bender. “It is well understood in this circuit that when a plaintiff files an opposition to a motion to dismiss addressing only certain arguments raised by the defendant, a court may treat those arguments that the plaintiff failed to address as conceded,” the case says.